Will tariffs raise iPhone prices?

Allison Johnson at The Verge:

President Trump’s 34 percent tariff increase on Chinese goods is set to take effect on April 9th, making things even more complicated. Will Apple, for instance, pass the extra cost of an iPhone right along to buyers? The market seems to think so. It’s likely why Apple’s shares are down almost 10 percent, the worst drop in about five years.

But Gerrit Schneemann, a senior analyst at Counterpoint Research, doesn’t necessarily believe we’ll see an immediate price increase.

“I don’t foresee them… on a short-term basis just raising prices unnecessarily,” Schneemann told The Verge.

He points out that Apple’s margins (historically about 38 percent) give it more wiggle room to absorb the costs of the tariffs, at least in the short term. “But I think if this sticks, then probably with the 17 we could see a price hike,” he said, referring to the iPhone 17 expected in the fall.

Hard to say what will actually happen, but Apple is in the best position compared to other companies to hold their prices. Apple is focused heavily in growing their services revenue, and if they hold their prices, the price delta between Apple and its competitors will decrease, giving people a huge incentive to buy a higher quality Apple product.

More Apple products sold inevitably means more services revenue.

If prices do go up, I think US customers will be spared at the expense of other countries like it has in the past when Apple adjusts product pricing due to inflation.

What I do know for sure is, prices aren’t going down, so buy now if you are in the market.